Summer is well and truly behind us. The good thing is that Covid feels like it’s now behind us as well! The much needed Property Management Industry reforms are now live which is a great thing for landlords and tenants alike but Insurance Premiums are on the rise and this will hurt.
This is what to expect this Autumn from the Sydney Rental Market…
First of all, a warm hello from the NextGen Team. We hope everyone continues to stay safe, and everyone has now settled into the new year (before we know it, it’s already March!). This is an update on covid (hopefully the last ever), the industry and rental market, and also our Easter office closure dates.
1. Covid? What “Covid?”! Without wanting to jinx ourselves, Covid restrictions have all been but forgotten. The last remaining measure is the moratorium for evictions due to covid which has been extended to the 26th of March (next week). With a bit of luck, that will be the last we will ever hear of covid and we can all move forward once and for all! 
2. Property Management Industry Reforms. The much anticipated Property Management industry reforms are finally kicking in this month (a year after first announced). They include a range of new requirements for agencies including having documented operating procedures for every aspect of the business as well as new requirements to complete ID Verification checks when entering into an agreement and to monitor, supervise, mentor and regularly train staff. This is the largest overhaul of the industry in decades and it is aimed at improving the quality and standards. Based on what I have been seeing, this is absolutely necessary. As always, NextGen is across and in most cases ahead of these requirements having developed a range of instructions and templates since its inception. Being a process-driven agency is something that we are very proud of at NextGen and we have over 50 such procedures we have been operating under, to ensure quality and consistency in everything we do!
3. Update on the rental market. The Sydney rental market continues to be tough, but has slightly improved when compared to pre Christmas. The freestanding rental market (houses, townhouses and villas) remains stable, as tenants are still looking for that extra bedroom and back yard. Limited new supply coupled with cashed up professionals, means that the segment of the market looking for freestanding properties, is now finding it hard to find suitable properties and demand is high. If you have a house, villa or townhouse, you can be optimistic of your rental prospects for the foreseeable future.
The unit and apartment market on the other hand, is as challenging as ever and there is no end in sight. The issue of increased supply (influx of new apartments) and reduced demand (lack of students, migrants, and temporary workers) remains. As a general rule, unit and apartment rents have dropped between 5-15% when compared to 2019 and the closer the property is to Sydney CBD, the worst it is. If you have had a vacancy in the last 12 months you would have seen this already. If on the other hand, your tenant has been in your property since before Covid, chances are that you are looking at a sizable reduction and lengthy vacancy period, if your property became vacant right now. When it comes to units and apartments, it is definitely a tenant’s market so my advice to all such landlords (one of which is myself) and my instructions to the NextGen team is to keep existing [good] tenants as happy as possible and to lock them in on a fixed term as soon as the current fixed term agreement expires (12 months preferred but 6 months is also OK).
4. Landlord insurance premiums are on the rise. After a period of 3 or so months last year, in which insurance providers stopped accepting new customers, they are now all back in business. Unfortunately, this coincided with steep increases in annual Premiums. And whilst their explanation has been that this was due to the NSW Emergency Services Levy (‘ESL’) (amount included in premiums for the purpose of recouping NSW emergency service contributions), the reality is that the increase is due to an unprecedented spike on the price of Base Premiums. As a result, all premiums are now coming back for renewal anywhere between $50 and $150 more when compared to last year! I am also anecdotally hearing that some suppliers are also modifying their policies and for at least one of them, Fixtures and Fittings are no longer included in the basic landlord policy.
My fear is that we are going into a dangerous new period in which Insurers will try to recoup some of their Covid losses and will do so through subtle changes to their Policies. My advice to all landlords is to be extra vigilant when they receive renewal notices. I do urge everyone to review the Policy attached to each renewal and speak to us OR the insurer directly with any concerns before renewing.
Thank you for reading and stay safe!
Who we are:
If you liked the content of this article and would like to learn more about NextGen and the services we provide, feel free to make contact with us by filling in the form on this location https://nextgenpm.com.au/contact-us/.
NextGen Property Mgmt (www.nextgenpm.com.au) is a boutique Real Estate licensed agency that specialises in property management. NextGen Property Mgmt does NOT have a sales team unlike most other agencies that specialise in Sales and have Property Management as a side business.
Our area of focus is residential property and we operate in the Eastern Suburbs, Inner West, Canterbury-Bankstown, South West Sydney, and St George.
NextGen was created from its infancy to cater for investors as it was founded by investors who quickly realised that in a highly regulated industry like Real Estate – competence, expertise, care and service by property managers varies greatly.
As an investor, you need to have trust for and feel valued by your property manager. You need to know that your property is being looked after and you are getting maximum return for your investment. At NextGen we understand that because we are investors with busy lives ourselves.